1) When and how does the flat rate of conciliation (bareme de conciliation) apply?
Article L.1235-1 of the Labor Code provides for the possibility for the parties to put an end to the dispute which sets them against an agreement found in the minutes of the Conciliation and Orientation Office.
The agreement must then provide for "payment by the employer to the employee of a lump sum compensation", the amount of which is determined by article D.1235-21 of the Labor Code, depending on the seniority of the employee at the within the company:
|
Seniority of the employee in the company |
Applicable « Indemnité forfaitaire de conciliation » |
|
Inférieure à un an |
2 months of salary |
|
Between 1 and 8 years |
3 months of salary + one month per additional year up to 8 years seniority |
|
Between 8 years and less than 12 years |
10 months of salary |
|
Between 12 years and less than 15 years |
12 months of salary |
|
Between 15 years and less than 19 years |
14 months of salary |
|
Between 19 years and less than 23 years |
16 months of salary |
|
Between 23 years and less than 26 years |
18 months of salary |
|
Between 26 years and less than 30 years |
20 months of salary |
|
Above 30 years |
24 months of salary |
Nevertheless, with regard to the letter of the text, it appears that only disputes relating to the termination of the employment contract of indefinite duration can benefit from this device.
Indeed, Article L.1235-1, paragraph 2 of the Labor Code provides that "The minutes recording the agreement constitutes waiver by the parties to all claims and indemnities relating to the termination of the employment contract provided for in this chapter. ".
Therefore, it appears that in the presence of a request for overtime, non-payment of wages or any other request not related to the termination of the employment contract, the flat rate of conciliation not intended to apply.
2) Tax and social benefits of the flat-rate conciliation indemnity
Recourse to the minutes of conciliation is advantageous for both parties, both from a fiscal and social point of view.
2.1) A tax exemption without the limit of 6 PASS: it is very interesting for the senior executives who perceive a high remuneration and which have a long seniority
First, the employee benefits from a tax exemption, total or partial, depending on the case, of the amount received as a lump sum conciliation indemnity.
In fact, article 80 duodecies (of French Tax Code) provides that the indemnities paid on the occasion of the termination of the employment contract and mentioned in article L.1235-1 of the Labor Code (relating to the scale of conciliation), are exempt from income tax, within the limits of the scale.
Thus, since the allowance paid corresponds to the scale, it is entirely exempt.
This allows to escape the cap of 6 PASS.
Example: a manager who earns 50,000 euros per month and with 30 years of seniority can benefit from a tax exemption up to 1,200,000 euros (50,000 euros x 24).
It is therefore very interesting for senior managers who have seniority, with a high salary.
If he had traded via a transactional agreement, he would have benefited from a tax exemption within the limit of 6 PASS, or 238.392 euros.
On the other hand, if the employee receives a conciliation indemnity higher than the scale, the fraction exceeding this scale is subject to tax.
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Frédéric CHHUM, avocat and member of the Paris Bar Council (conseil de l’ordre des avocats de Paris)
CHHUM AVOCATS (Paris, Nantes, Lille)
e-mail: chhum@chhum-avocats.com
https://www.instagram.com/fredericchhum/?hl=fr
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